BANK Definition

BANK is a financial entity that is licensed by a government to receive monetary deposits: commercial/retail banks and investment banks. In most countries, banks are regulated by a national government or central bank.

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PROVISION FOR CREDIT LOSSES, in lending institutions, is a charge to income which represents an expense deemed adequate by management given the composition of a bank's credit portfolios, their probability of default, the economic environment and the allowance for credit losses already established. Specific provisions are established to reduce the book value of specific assets (primarily loans) to establish the amount expected to be recovered on the loans. See also PROVISION.